Sharp pushes tax plan

Posted: Wednesday, April 05, 2006

Brenda Bernetbrenda.bernet@amarillo.com

Former state Comptroller John Sharp began a one-day, four-city sprint Tuesday in Amarillo where he made a pitch for a proposal, drafted by a 24-member governor-appointed panel he led, to cut school property taxes.

Gov. Rick Perry charged the commission last fall to make a significant reduction in school district property taxes and to develop a constitutional tax system to pay for public education. The state Supreme Court gave legislators a June 1 deadline in November to implement a constitutional tax system to pay for public education.

Commission members released their plan at the end of last month. Legislators will consider the recommendations and others when they return April 17 to Austin for a 30-day special session on school finance.

Lower property taxes will allow more people to own homes and will encourage more businesses to move to Texas, Sharp said.

"You can't even have a discussion about school finance until you fix the broken property tax system," Sharp said. "We want people to come into Texas. We want them to build big buildings. Then, we give them the highest property tax in the nation. It doesn't always work in trying to get the kind of manufacturing and folks we want to come in the state of Texas."

The Texas Tax Reform Commission proposal would cut school district property taxes for operations by one-third, replacing the revenue with $1 billion of an estimated $4 billion surplus in the state budget, an expanded franchise tax and a $1-per-pack higher tax on cigarettes, Sharp said. The proposal also includes lowering a cap on the tax rate for school district operations by 20 cents per $100 of taxable property value.

Under the proposal, more businesses would pay the franchise tax, but the rate would drop from 4.5 percent to 1 percent.

In calculating franchise taxes, business owners could choose a deduction either for employee health insurance and benefits or the cost of goods sold.

"It invests in people," said Jodie Jiles, a Houston business leader and tax reform commissioner. "If you hire a worker in Texas, your tax goes down. If you invest in health care, your bill goes down."

The health system will benefit if more smokers kick the habit, Jiles said.